Is solar power running into a grid problem?

Just what solar energy companies don’t need—what could be an emerging risk that the existing national electricity grid isn’t up to the task of getting solar-generated electricity to consumers.

First Solar’s (FSLR) December 22 cancellation of plans to build a 150-megawatt solar power plant in the high desert of Colorado points in that direction. In the company’s explanation for withdrawing its application to build the plant the company noted that it is reviewing all of its projects with an eye to factors like transmission capacity.

Could tranmission capacity--or the lack thereof--be emerging as the next bitg problem facing solar energy companies?

The United States has plentiful supplies of sunshine and plenty of relatively empty land in the desert West of California, Nevada, Colorado, New Mexico, and Arizona. But the consumers who need that electricity are concentrated on the east and west coasts. The existing electricity grid all too often doesn’t provide an easy—and inexpensive way—to connect remote central solar power plants with the country’s population centers.

The problem is made worse by the intermittent nature of solar power—when the sun don’t shine, solar power plants don’t generate electricity. That requires that solar power plants be connected to other power supplies that can balance loads and supplies when solar-generated electricity is in temporarily short supply. Those kinds of connections and real-time load balancing technologies are in especially short-supply in today’s grid.

First, those solar companies that are focused on big central solar power plants in remote areas such as First Solar and BrightSource Energy are more vulnerable to the higher costs and risks caused by the current clearly inadequate national electricity grid. In some proposed locations for these centralized solar power plants, transmission costs, rather than solar costs, will make or break a project.

Second, that companies that remain focused on smaller projects nearer to population centers and that are better integrated into the current grid—such as a photovoltaic array on a warehouse roof—are relatively untouched by this risk.

Third, those companies building out solar projects such as FPL (FPL) that operate in a state such as Florida with an abundant supply of sunshine but where the consuming population is relatively close at hand and that have a ready supply of base power from technologies such as nuclear power plants may have a significant edge in building out solar capacity.